Western Price Survey
July 25, 2014
Power prices, particularly in the Northwest, showed substantial gains since the previous week as a heat wave headed for Portland and Seattle.
High temperatures in Portland are poised to surpass 90 °F starting Monday, while Seattle highs could reach the 80s. In contrast, both San Francisco and Los Angeles will lose a few degrees, with high temperatures in LA dropping to the 80s and San Francisco falling to the 70s.
Not surprisingly, Northwest power prices jumped. Average peak prices since last Friday gained about $9/MWh at Mid-Columbia to $43, while the California-Oregon Border saw a rise of $10 to $47/MWh. South of Path 15 prices, however, still outpace other hubs (see chart).
Cal-ISO saw significant ramping of thermal generation on July 24, when temperatures in California were a bit above normal. Thermal ramping exceeded 1,000 MW/hour for much of the day as load accelerated to a peak of 43,696 MW (see "Power Gauge" next page).
Off-peak prices also climbed, but the increase was more dramatic in the Southwest. SP15 prices picked up about $5/MWh over the reporting period to $45/MWh; Palo Verde gained $4 to $38/MWh.
Working natural gas in storage rose to 2,219 Bcf as of Friday, July 18, according to the U.S. Energy Information Administration. A net increase in storage of 90 Bcf for the week put storage levels 20.2 percent below year-ago levels and 23.5 percent below the five-year average for the week.
The storage build came in lower than market expectations, but natural gas prices tumbled in the July 17 to July 24 trading period. Henry Hub prices, for example, which have been trending down for the past several weeks, shed 24 cents to $4.04/MMBtu, a decline that most Western hubs more or less tracked (see table).
According to a Friday report from Barclays analysts, U.S. natural gas prices remain generally depressed because of cooler-than-normal weather across the nation, strong gas production, and above-consensus natural gas injections in previous weeks.
Analysts said that production continues to grow quickly -- initial pipeline scrapes indicate production growth of about 3.3 Bcf/d on a year-over-year basis and 321 MMcf/d on a month-over-month basis so far in July. "These factors have lessened market anxieties about lower-than-average storage levels," Barclays said.
Although gas prices remain weak, "the risk to prices is skewed to the upside assuming a normal weather scenario for the rest of the summer," the analysts argued. Perhaps the key word there is "assuming" [Chris Raphael].
Archives of the Western Price Survey for the past year are also available online.
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